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A former hedge fund manager has been sentenced in federal court in San Francisco to 14 months in prison for bilking investors out of $6 million and failing to pay promised restitution, according to the U.S. Attorney’s Office.

Lawrence Goldfarb, 55, formerly of San Anselmo, was sentenced Tuesday in the courtroom of U.S. District Judge William Alsup after pleading guilty to wire fraud in April, prosecutors said.

Goldfarb was the managing partner of Baystar Capital II, a firm that made primarily short-term investments but also made various “side pocket” investments that were difficult to value.

One such investment was $8.4 million in Island Fund LLC in 2003, which returned more than $16 million over the next several years, prosecutors said.

Goldfarb then used that money for other investments, including companies where he had a financial interest, while not informing Baystar Capital II’s investors.

When investors asked about the funds, he falsely told them they were not eligible for distributions, prosecutors said. His scheme cost the investors an estimated $6 million.

In March 2011, Goldfarb agreed to pay the investors $12 million on a payment schedule, but he stopped making payments and was found to be spending hundreds of thousands of dollars on private air travel, vacations and Golden State Warriors tickets, prosecutors said.

Because of that, the court allowed his prosecution to proceed.

Goldfarb will begin serving his federal prison sentence on Nov. 4 and will also serve three years of supervised release once he is released from prison, prosecutors said.

Scott Morris, Bay City News

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